UK: Farmland prices hit record

Farmland prices hit yet another record high during the first half of 2013 and have now more than trebled in less than a decade, according to the latest RICS Rural Land Market Survey.

During the first six months of the year, the cost of farmland jumped to £7,440 ($8,615) per acre across the UK, hitting a record high for the eighth consecutive period. The cost of land is now more than three times that of the same period in 2004, when an acre cost just over £2,400 ($2,779).

The growth in prices has been driven by an on-going surge in demand from farmers and investors alike.

The RCIS has noted that hikes in commodity prices are leading the charge to expand agricultural operations and investors increasingly are seeing land as an economic safe haven.

With bare farmland so sought after, the six months to June saw a slight increase on the amount coming onto the market. Some 14% more chartered surveyors reported rises rather than falls in supply. Despite this, the sheer pace of growing demand outstripped the amount available land.

Across Great Britain, land prices were highest in the North West. The cost per acre was lowest in Scotland. That said, prices North of the border still reached record levels.

The RCIS believes the market is far from finding its level. Respondents expect the trend of rapidly growing prices to continue over the coming year, with 46% more surveyors predicting further growth.

Sue Steer, RICS spokesperson, said: “The growth in farmland prices in recent times has been nothing short of staggering. In less than ten years we’ve seen the cost of an acre of farmland grow to such an extent that investors – not just farmers – are entering the market.

“If the relatively tight supply and high demand continues, we could experience the cost per acre going through the ten thousand pound barrier in the next two to three years.”